Wednesday, December 19, 2007

Yahoo Column on Credit Cards

I wrote about some of the dirtiest credit card industry practices.
While overall the ratings were quite positive (3 1/2 out of 5),
Negative reactions were interestingly split between those who thought the advice was too basic, those who complain you don't need credit cards at all, ("Why MUST we use debt ever? ") and those who call me a man. (my favorite: "Man-ya").

For those who think the advice is too basic: When the average household credit card debt goes below $8000, this advice can be retired.
For those who think that you don't need credit cards at all: You're right. Unfortunately, my editor asked me to soften my recommendation that you don't carry debt and pay off the balance every month.
For those who think I am a man: You're right. I am the first transsexual personal finance web celebrity. You heard it here first.


VK said...

Great piece on credit cards. I wanted to forward a link to my 18-yo nephew who just got his first credit card recently...but after reading the piece, I decided against it. He would not have understood all the finance jargon and insider lingo. So I called him up and translated it to him. Otherwise, good stuff.

Highest & Best Use said...

I'm in my late 20's, and after working several years in investment banking, and presently in private equity... I encourage all of my friends to maximize their dollar by leveraging their current income through strategic debt use (i.e. Credit Cards). That said, after I had originally read your article, I only thought that the information was relatively obvious for any person who is financial responsible. However, after reading you absurd comment, "For those who think that you don't need credit cards at all: You're right.” I felt I had to say something.

While over leveraging yourself is a danger that many Americans currently face, debt is a tool that allows society to prosper. I personally have a weighted average of 4.7% on my credit card debt, which is approximately at $9000. If you consider the internet banks that are currently offering rates in excess of 5% (with no fees or minimum deposits), why on earth would I pay down my card when there are higher returning uses of my cash out there. Or, what about the 1-3% cash back on all purchases? If you incorporate the cash back as a reduction of your overall interest rate, there is an even greater incentive to incur debt.

I enjoy reading your blogs and “some” of your articles, but I don’t see how you can be financially sound individual, and not have a credit card. Oh yeah, your picture on Yahoo! is smoking hot ;-)

Anonymous said...

I was the one on yahoo who commented that debt is not a MUST. It's simply a choice. I was slammed for my comments for so called financial experts. However, Yahoo doesn't allow posters to reply, so I will shamelessly do it here...thanks Anya...You are smoking hot!

For the person who said I know nothing about finance... I have MBA with a emphasis in finance from a major university. Whoop dee doo. While the principles of finance are essential in business, it's a matter of choice for individuals or households. The individual who is over leverage RARELY if ever wins.

For the who stated credit cards are for emergencies and how would they pay for a new furnace without a credit card... How about a 6 month emergency fund. One can have as many lines of credit as you want, but an emergency fun is essential. What if you have debt and lose your income? You go deeper and deeper month/month and the effort to get out multiplies.

Anya, how about this... why don't you at least acknowledge that debt is not a MUST and that everyone has a choice. At one end of the spectrum you have all of the financial experts who feel individuals can leverage dept to maximize cash flow like a business. At the other end of the spectrum are those who have no debt, rely on a 6-12 month emergency fund (in high yield savings) and use debit cards for cashless transactions. Most people will find themselves somewhere in between where they have a mortgage and auto loans but pay of credit cards every month.

I would be happy to contribute to subsequent articles on the subject because I feel strongly that Generation Debt is a circumstance that society encourages, not one that is essential.


Anonymous said...

They says to you you're a man ?

You've got a very pretty face.
Each time I see your face on Y!Fianance I stop to look at it...
Have a nice day... kiss

debt advice said...

Love it! Very funny & very true at the same time. I am a huge fan of DR & often hear people saying it is too basic - I think (with your permission), i'll just quote "For those who think the advice is too basic: When the average household credit card debt goes below $8000, this advice can be retired." next time! ;)